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Friday, August 19, 2022
HomeNewsMeasure Exchange Rate With Inequality Gap, Govt Urged

Measure Exchange Rate With Inequality Gap, Govt Urged

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Fight Inequality Alliance (FIA) Zimbabwe says the new measures announced by the Finance Minister Professor Mthuli Ncube to stabilize the exchange rate and promote the availability of basic commodities should be measured to the extent of bridging gaps between the rich and the poor.

In a statement, FIA said measures to address exchange rate volatility by the finance minister were not a remedy to address lack of public confidence.

“It remains the Alliance’s view that any intervention meant to address the current socio-economic crisis in Zimbabwe must be measured against the extent to which it advances the agenda of reducing poverty and bridging the widening gap between rich and poor Zimbabweans.

“The entrenchment of the multicurrency and exchange rate systems in law is just a move to reaffirm the government’s position and not a long-lasting panacea to address the lack of public confidence in the two systems. Boosting public confidence in the multi-currency system cannot be solely achieved through the entrenchment of systems in law but through addressing the root causes of inflation such as the lack of fiscal discipline and excessive quasi-fiscal operations by the Reserve Bank of Zimbabwe.

“The government should also guarantee policy consistency and predictability to restore public trust. Given the ongoing reminiscences of 2008 where the local currency is massively losing its value and inflation rising in double-digits per month, it is an undeniable fact that the USD will remain a currency of choice, especially for value preservation by the business community; hence more still needs to be done to instill confidence in the local currency,” said FIA

The social justice advocacy movement said the 100% increment of civil servants’ salaries will only bring temporary respite.

“It is factual that civil servants are part of the working poor citizens. In as far as the 100% increment of salaries to civil servants is acknowledged, this is likely not to spur any meaningful results to the beneficiaries but offer a temporary relief given the high inflationary environment.

“Therefore, a salary increase that lags behind ever increasing prices cannot surely address the widening income inequalities and it means that public workers will remain worse off unless the government starts to give salaries pegged in US dollars to track exchange rate depreciation which is driving price growth. Also, salary increment without addressing the root causes of inflation is dealing with symptoms and not the root problem.

“The government offered to pay school fees for up to three biological kids for teachers with the current limit of ZW$20 000 per child. Given the high inflationary environment, the government must make this facility flexible and subject to review to match changing currency landscapes. Also, the incentive should be alive to the fact that not all civil servants have children going to school while some are breadwinners taking care of kids from their extended families. As such, it must be extended to non-biological children otherwise the incentive will bring no relief to some sect of public workers,” said the advocacy group.

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